The Ugly End to the Largest Service Contract In U.S History


Dealings between KBR and the Army have gotten “very nasty” as the two try to close out the largest government services contract in U.S. history, according to an article in Federal Times.

The dispute is over whether the remaining work in the $38 billion Logistics Civil Augmentation Program (LOGCAP) III should be completed on a fixed price basis, which the Army wants, or a cost-reimbursable basis, which is what KBR wants. The LOGCAP III contract provides everything from food to housing for the U.S. military in Iraq. In 2010 KBR was awarded the follow-on LOGCAP IV, supporting Corps Logistics Support Services (CLSS), Theater Transportation mission (TTM), and Postal Services Task Order in Iraq. The Period of Performance is one base year plus four option years. The award represented KBR’s first major Task Order under the LOGCAP IV contract.

By its own estimates, KBR says the closeout work on the contract will cost more than $500 million and take up to 13 years. The final decision on the closeout, as well as years of still-unresolved audits, could cost or save the government hundreds of millions of dollars in additional costs.

The dispute has led to a badly damaged relationship between the Army and one of its largest contractors. Army officials sent KBR an ultimatum on the fixed-price issue, and KBR has responded with a lawsuit.